Dow holding support. Could see a pop early next week...

I've switched to a ST bullish position because of the support level the Dow Jones Industrials are holding. As long as the market holds the 15050 level into the close I will remain long for a potential move towards the May highs.  200% long /ES @ 1653

Sold the remainder of Sept 26 GDX calls @ $3.50

If I owned the etf I would probably hang on to some. However, I expect the volume spike circled on the chart below will provide resistance for several days, possibly weeks. $29-30 could contain prices for the foreseeable future.

Slowly moving to the downside...

Today's downside break does not have the volume and fear in it that I would like to see.  Could be nothing but it's something I'm paying attention.  However, for safety's sake, I cut my leverage down a 1/3 and covered some /ES @ 1660 (from 1704.5). I also unloaded 1/2 of my Sept 26 calls in GDX @ 3.20. The next few days will let us know if this decline is for real or not.

edit:  I must have been looking at something different but I take back my earlier comment about volume. The volume up until this point (8am-10am) is the highest it's been in weeks

S&P 100 and Small Cap Volatility

The long term internal trend line that initiated the sell off in May is being tested again. On a cycle basis, I mentioned a few weeks ago that the first week in August was when the next top was due. With declining breadth and small cap volatility at weekly support, along with the OEX at resistance, the seeds have been sown for a 12-16% decline.  After the sell off, I believe there is enough evidence to support the yearly cycle low for the market in the Sept-Oct time frame. At that point, there should be one more higher high in the spring of 2014. After the decline starts, I'm sure more clues to the future will begin to emerge.
Monthly

Weekly

RVX Weekly

RVX Daily

I am now 300% short from /es 1684.50. IMO, this will be a move lower much like the summer 2011. Probably not as vicious a move lower but similar nonetheless.

Setting up for the ride back down...

I'm back to 200% short from /ES 1665.50. The markets have fulfilled my upside projections. The move lower could start at any moment.

The RUT is even more bearish.

Expect a move towards 1670...

In the very ST, I am expecting a pull back towards 1620 or so where I will probably go long for a ride towards the May highs. This is the area I want to re-short the market. I tweeted a couple weeks ago that if the VIX closed the week below 17.50 it would suggest that pullback was over. It hindsight it now appears that was correct.

After seeing the VIX close below that 17.50 level and noticing the OEX hold support, I came to the conclusion that a move towards the May highs was probable. I did not go long because I wanted to be sure and I don't mind risking some of the upside to be more certain. The two charts below are a long term and short term chart of the OEX

The McClellan Oscillator has now broken it's downtrend and suggests that a new ST cycle has begun.

In conclusion, I believe the market has entered into a new ST up/sideways cycle that should last until early to mid August. I think the top end of the range will be 1670 on the SPX and volatility will still be present. The next 4 weeks or so should provide lots of trading opportunities for those that are ready.

closed /ES short @ 1597.50

I closed my short position last WED. but failed to post it real time because I was unable to. I will be putting up a blog post explaining why I closed the short in anticipation of a market move towards 1670. So far it was the right move. I was planning on doing this post last Fri. but got side tracked with other things. I will post my reasoning for the ST change in thought shortly.